By 1864, Federal control of the Shenandoah Valley of Virginia was viewed as necessary to a Union victory because of the Valley's configuration and its economic potential to the Confederate war effort. The Valley's alignment from southwest to northeast made it an excellent Confederate avenue of approach, threatening Federal resources in Maryland, Pennsylvania, and of course, Washington, D.C., itself. The excellent road system, including the hard-surface Valley Pike (US 11), allowed rapid movement into vulnerable Federal areas. The Valley had seen little warfare since General Stonewall Jackson's brilliant 1862 campaign had secured it as a supply base for the Confederates. The area had continued to produce a large portion of the food required by Lee's army in eastern Virginia as well as that needed in other parts of the Confederacy. Unfettered access to the Valley put the produce of nearby parts of Maryland and Pennsylvania within Confederate reach as well.
General Ulysses S. Grant therefore included the Valley as a part of his strategic planning for Federal forces in the spring of 1864. Operations there would protect the strategic flank of the Army of the Potomac as it operated against Lee in eastern Virginia while also making better use of the Federal troops scattered about the area. Success would end the Valley as a threat and would deny its resources to the hardpressed Lee.
Grant's careful plans were thwarted by a Confederate victory at New Market on 15 May and the defeat of a second Federal force at Lynchburg on 18 June. Those reverses created the opportunity for General Jubal Early, who had rushed his corps to meet the Federal threat at Lynchburg, to go on the offensive. Early's famous raid on Washington climaxed with his withdrawal back into Virginia on 14 July. His spectacular enterprise had diverted the XIX (19th) Corps from joining Grant against Lee at Petersburg. A second corps, the VI (6th) had been pulled out of the Petersburg lines and rushed north to protect the Capital. These Federal units pursued Early as far as Snicker's Gap and then broke contact preparatory to rejoining Grant in eastern Virginia.
But the Federal forces remaining in the Valley were unable to contain Early. He defeated General George R. Crook at Kernstown in late July and went on a rampage against Federal logistics facilities in Martinsburg, W.Va., and along the Potomac River. On 30 August, Confederate cavalry destroyed part of Chambersburg, Pa., in retaliation for damage done by Federal troops in Lexington, Va., the previous June.
Early's dominance of the lower Valley was the last straw for Grant. In early August, he directed the consolidation of Federal forces in the Maryland, West Virginia, and northern Virginia areas into a new Middle Military Division and placed General Philip H. Sheridan in command. The VI and XIX Corps were returned to the Valley as part of this force. Units previously assigned to the area were consolidated into an VIII (8th) Corps. The local cavalry division was joined by two horse divisions from the Army of the Potomac to create a cavalry corps for this powerful new force. Sheridan was instructed by Grant to end Confederate military power in the Valley and to destroy the Valley as an economic asset: "It is desirable that nothing should be left to invite the enemy to return. Take all provisions, forage and stock . . . such as cannot be consumed, destroy . . . If the war is to last another year, we want the Shenandoah Valley to remain a barren waste."
Early and Sheridan sparred with each other for nearly a month. Sheridan was under orders to have no more disasters such as those experienced earlier in the year. At the same time, he labored under the assumption that Early enjoyed greater strength than he actually had. Ironically, Early was hampered by Lee's underestimation of Sheridan's strength, which resulted in Lee's recalling General Joseph B. Kershaw's Division to Richmond on 16 September after a month of no decision in the Valley. Sheridan immediately made his move and dealt Early a severe blow at the Third Battle of Winchester on 19 September. Early had become overconfident in the face of Sheridan's apparent lack of aggressiveness, and he deployed his divisions beyond easy supporting distance of each other. Caught off balance, they were hurt by the Federal infantry and finally broken by the hard-hitting Federal cavalry. Sheridan was a believer in the use of horse en masse to maximize its shock and mobility. Early quickly developed a respect verging on phobia for this powerful Federal arm.
Early's army was chased back to strong positions on Fisher's Hill, just south of Strasburg. Here the mountains close in to narrow the Valley to less than five miles. Unfortunately, Early did not have the manpower to hold the entire distance in strength. He extended his line westward with a thin band of dismounted cavalry. Sheridan noticed this and on 22 September sent the VIII Corps on a circuitous march which brought it in perpendicular to the Confederate flank while the rest of the Federal force made a strong demonstration on Early's front. The VIII Corps, again assisted by the Federal cavalry, rolled up the Confederate flank. Early and his men were forced to retreat as far south as Harrisonburg, with Federal cavalry in pursuit most of the way.
At this point Sheridan, assuming that after two smashing defeats Early's army was no longer a factor, turned his energies to Grant's second directive—the destruction of the Shenandoah Valley. The orgy of destruction called "the burning" extended as far south as Staunton. The Federals then began a leisurely withdrawal northward down the Valley, and Early followed closely, reinforced again with Kershaw's Division and also with General Thomas L. Rosser's cavalry, the Laurel Brigade, sent from Richmond. On 9 October Rosser was beaten badly by Federal cavalry at Tom's Brook and forced to withdraw in great disarray. Early, never an admirer of cavalry, observed that "the laurel is a running vine." The Federals came to rest in positions on the north bank of Cedar Creek on 10 October.
Generals Grant and Sheridan had by then become engaged in a polite controversy over Sheridan's next move. Grant advocated Sheridan attacking south up the Valley to Lynchburg and then moving east to join the Army of the Potomac, destroying all railroads, canals, and so on as he went. Sheridan felt this proposal was logistically impossible. Instead, he urged going on the defensive in a position in the lower Valley sufficiently southward to protect Federal assets along the Potomac, then sending his surplus troops to Petersburg by way of Washington. As a result of these differences of opinion, Secretary of War Edwin M. Stanton called a conference in Washington. Sheridan, meanwhile, had already sent the surplus VI Corps overland by way of Ashby's Gap to begin the drawdown.
Unexpected Confederate activity caused Sheridan to change his plans, however. The Confederate force had arrived at Hupp's Hill, midway between Cedar Creek and Strasburg, on the morning of 13 October. Early immediately deployed in battle formation, and his artillery opened fire on Federals camped around Belle Grove Plantation. The First Division of Crook's VIII Corps crossed Cedar Creek and attacked toward the Confederate guns, becoming engaged in a sharp fight with Kershaw's Division. The Federals sustained over 200 casualties and a brigadier was mortally wounded, while the Confederates lost 75 men and had one brigadier severely wounded. (These badly mauled Federal troops would be the first to bear the brunt of Early's attack at the Battle of Cedar Creek.) Confederate cavalry also was in evidence on Sheridan's extreme western flank during this engagement. The revelation of Early's close presence in strength led the careful Sheridan to recall the VI Corps just as it was reaching Ashby's Gap. Early pulled back to Fisher's Hill but continued to make aggressive reconnaissances forward to Hupp's Hill to observe Federal activity and to probe for weaknesses.